Reviewing Ameris Bancorp (NASDAQ:ABCB) and Mercantile Bank (NASDAQ:MBWM)

Ameris Bancorp (NASDAQ:ABCB) and Mercantile Bank (NASDAQ:MBWM) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their risk, institutional ownership, profitability, earnings, valuation, dividends and analyst recommendations.

Analyst Recommendations

This is a summary of current recommendations for Ameris Bancorp and Mercantile Bank, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ameris Bancorp 0 0 7 0 3.00
Mercantile Bank 0 1 0 0 2.00

Ameris Bancorp presently has a consensus price target of $51.33, indicating a potential upside of 32.99%. Mercantile Bank has a consensus price target of $38.75, indicating a potential upside of 21.70%. Given Ameris Bancorp’s stronger consensus rating and higher possible upside, research analysts plainly believe Ameris Bancorp is more favorable than Mercantile Bank.

Institutional and Insider Ownership

87.0% of Ameris Bancorp shares are owned by institutional investors. Comparatively, 54.0% of Mercantile Bank shares are owned by institutional investors. 2.0% of Ameris Bancorp shares are owned by insiders. Comparatively, 3.2% of Mercantile Bank shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Ameris Bancorp and Mercantile Bank’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ameris Bancorp $531.74 million 3.45 $121.03 million $3.38 11.42
Mercantile Bank $160.99 million 3.25 $42.02 million $2.53 12.58

Ameris Bancorp has higher revenue and earnings than Mercantile Bank. Ameris Bancorp is trading at a lower price-to-earnings ratio than Mercantile Bank, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Ameris Bancorp and Mercantile Bank’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ameris Bancorp 23.09% 11.24% 1.41%
Mercantile Bank 25.74% 10.88% 1.22%

Dividends

Ameris Bancorp pays an annual dividend of $0.40 per share and has a dividend yield of 1.0%. Mercantile Bank pays an annual dividend of $1.04 per share and has a dividend yield of 3.3%. Ameris Bancorp pays out 11.8% of its earnings in the form of a dividend. Mercantile Bank pays out 41.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Mercantile Bank has raised its dividend for 6 consecutive years. Mercantile Bank is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Ameris Bancorp has a beta of 1.45, suggesting that its stock price is 45% more volatile than the S&P 500. Comparatively, Mercantile Bank has a beta of 0.82, suggesting that its stock price is 18% less volatile than the S&P 500.

Summary

Ameris Bancorp beats Mercantile Bank on 12 of the 17 factors compared between the two stocks.

About Ameris Bancorp

Ameris Bancorp operates as the bank holding company for Ameris Bank that provides banking services to retail and commercial customers primarily in Georgia, Alabama, Florida, and South Carolina. The company operates through five segments: Banking Division, Retail Mortgage Division, Warehouse Lending Division, SBA Division, and Premium Finance Division. It offers commercial and retail checking, regular interest-bearing savings, money market, individual retirement, and certificates of deposit accounts. The company also provides commercial real estate, residential real estate mortgage, agricultural, and commercial and industrial loans; consumer loans, including motor vehicle, home improvement, and home equity loans, as well as loans secured by savings accounts and small unsecured personal credit lines; and municipal and commercial insurance premium finance loans. It operates 125 domestic banking offices and 16 loan production offices. Ameris Bancorp was founded in 1971 and is headquartered in Moultrie, Georgia.

About Mercantile Bank

Mercantile Bank Corporation operates as the bank holding company for Mercantile Bank of Michigan that provides commercial and retail banking services for small- to medium-sized businesses and individuals in the United States. It accepts various deposit products, including checking, savings, and term certificate accounts; time deposits; and certificates of deposit. The company also offers commercial and industrial loans; vacant land, land development, and residential construction loans; owner occupied real estate, non-owner occupied real estate, and multi-family and residential rental property loans; single-family residential real estate loans; home equity line of credit programs; and consumer loans, such as loans for new and used automobiles, boats, and credit cards, as well as overdraft protection services. In addition, it provides courier services and safe deposit facilities; repurchase agreements; and insurance products, such as private passenger automobile, homeowners, personal inland marine, boat owners, recreational vehicle, dwelling fire, umbrella policies, small business, and life insurance products, as well as operates and 40 automated teller machines. The company operates 46 banking offices. Mercantile Bank Corporation was founded in 1997 and is headquartered in Grand Rapids, Michigan.

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